Buying Cars from Customers
By Mark Curcio

While it’s no secret that the used vehicle market is continuing to become a primary driver of profitability for franchise dealerships, other used vehicle retailers are already ahead of the curve in terms of inventory sourcing and honing their acquisition strategies.

We’ve watched auto retailing titans like AutoNation continue to focus on used vehicle operations
as part of their business plan and CarMax continues to dominate the market with their multitude
of locations and large inventories. Carvana, a relatively new player, has entered the space and
expanded rapidly over the past two years.

It’s not a surprise as new vehicle prices continue to rise, and customers hold on to their vehicles
for longer than at any time in history. When we put into perspective sales numbers for
automotive retail, new vehicle sales totaled 16 million in 2019 with used vehicles far outpacing
that coming in at 40 million vehicles sold. The challenge a strong used vehicle market
presents for all automotive retailers is inventory sourcing.

Auctions purchases are more competitive than before with the aforementioned used vehicle
retailers scrambling to replenish their inventories. Trade ins are a great source of inventory but
less predictable in terms of acquiring the fast moving, high return vehicles. What many dealers
have overlooked or are just beginning to capitalize on are “buying cars from customers” what
has traditionally been referred to as buying vehicles at the “curb”.

An advantage that large scale used vehicle operations like CarMax and more recently Carvana
have is that they are buying vehicles directly from customers wherever and whenever it is
possible. This acquisition strategy makes a lot of sense in terms of both acquisition cost,
building the brand experience and providing customers with another reason to interact and
conduct their business with these automotive retailers.

In a recent quarterly earnings conference call the CEO of Carvana, Ernie Garcia, has repeatedly
stated that Carvana is focused on buying cars from customers as their main source of used
vehicle inventory. In fact, Carvana has grown this acquisition strategy over 300% in the
past year. A recent Automotive News article wrote the following.

As Carvana grows rapidly in size and scope, the number of vehicles the online used-car retailer
buys from consumers has skyrocketed — and CEO Ernie Garcia expects that growth to
continue. “Whereas traditional trade-ins are restricted to the number of customers
buying from Carvana who also have a vehicle to sell, buying from consumers in general,
regardless of whether they intend to purchase, is an almost limitless proposition”.
Logically, there's no natural ceiling on how big it can be," Garcia said in September at an
investor conference in New York.

The direct from consumer acquisition strategy is why Vehicle Acquisition Network was founded.
Our industry leading software platform and training makes buying vehicles from customers more
efficient and effective. With data compiling, customized search criteria and rapid CRM
communication methods, a dealership can implement a customer acquisition strategy while
strengthening the dealership position within their market. We believe this profit center is far too
valuable to outsource to a third party.

If you’re interested in discussing buying cars from customers in more depth or you would like to
learn about the VAN software platform and training, you can reach us directly at 855-952-4949.